Nike Sues Former Employees in Promotional Sneaker Sales Scheme
Nike, Beaverton, Ore., is suing two former employees, their significant others and a sneaker collector, who each had a role in stealing and selling Nike’s promotional shoes in a plot that stretches back to 2006.
Nike employed Kyle Keoki Yamaguchi and Tung Wing Ho, both of Portland, Ore., as promo marketing managers. The pair allegedly ordered Nike promotional sneakers, known at Nike as “Look See” shoes, selling many of the stolen sneakers to collector Jason M. Keating, of Sanibel, Fla. for their own profit.
Nike filed a lawsuit April 28 against Yamaguchi, Ho and Keating—along with Yamaguchi’s wife, Shu-Chu Yamaguchi, and Ho’s girlfriend, Denise Wei-Ching Yee—with two counts of trademark infringement under the Landham Act as well as a count of conversion, fraud and breach of fiduciary duty. Kyle Yamaguchi, Ho and Yee also were charged with breach of contract, as all three are former Nike employees.
“In breach of trust placed in them by Nike, defendants Yamaguchi and Ho used their position as managers at Nike to steal unique and/or custom athletic footwear in order to profit from the sale of those shoes to collectors of rare athletic shoes, known in the industry as ‘Sneakerheads,’” Nike claimed in the lawsuit.
Kyle Yamaguchi was the promo product manager from July 2006 until he left to launch his sunglasses business LookSee Goods in January 2012, according to court records. Before he departed, he handpicked Ho, who had started at Nike in April 2005, to replace him.
“Yamaguchi provided training to Ho in ordering products, and introduced him to his method of ordering excess promo and sample footwear for use outside the scope of his job duties,” Nike said in the lawsuit.
Certain employees, including the promo product manager, had the ability to order promotional or sample sneakers, which resemble an existing style but have tailored features for an athlete, team, celebrity, etc. These styles are rare, and some sample styles are never released publicly, according to the lawsuit. These limited-edition shoes can fetch $1,000 to $10,000 or even more on the market. Nike estimates Kyle Yamaguchi received hundreds of thousands of dollars in sales profits.